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CASH Question Practice – Cinema Cash Budget

This question is a tricky one, but you can do it! Think about how the cinema operates first (draw a

diagram if it helps), then apply the numbers.

Old university friends and film fans Helen, Judy and Meryl run an independent cinema with a very

different offering from the large cinema chains. The one-screen cinema seats 250 people on two

levels. It attracts audiences who enjoy the experience of watching old and new films in an original

1930s cinema. The cinema offers luxurious décor, table seating and a wine list for the audience. The

friends decide to prepare a cash budget for the coming months. They want to see if they can pay off

their overdraft which at the end of August 2021 was £124,890. They gather the following information:

Tickets for downstairs table seating (40% of seats) are priced at £11 and upstairs seats (60%

of seats) priced at £9.

The cinema is usually 80% full every month. In October, they expect a 10% fall in ticket sales,

for just this month.

During the months September to December the expected number of film showings will be 30,

35, 30, 35 each month respectively. In August 35 films were shown.

Season tickets cost £150 and holders can watch one free film per week for a year. These are

only available to buy in November and they hope to sell 25 season tickets this year.

It is estimated that for every £1 the customer spends on a film ticket £0.40 is spent on food

and drink. The food and drink cost the cinema 40% of the food and drink spend. This cost is

paid to food and drink suppliers in the month following the sale. (Season tickets can be ignored

when considering food and drink).

Licensing is complex:

o Annual license fee of £1,000 paid in Oct

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